FXCM Inc. (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended June 30, 2013, revenues of $140.1 million, compared to $91.7 million for the quarter ended June 30, 2012, an increase of 53%. U.S. GAAP net income attributable to FXCM Inc. was $10.1 million for the Second Quarter 2013 or $0.32 per fully diluted FXCM Inc. Class A share, compared to a loss of $1.4 million or $0.06 per FXCM Inc. Class A share for the Second Quarter 2012.

Adjusted Pro Forma EBITDA for the Second Quarter 2013 was $54.5 million, compared to $21.0 million for the Second Quarter 2012, an increase of 159%. Adjusted Pro Forma Net Income was $23.3 million or $0.31 per share for the Second Quarter 2013, compared to $7.9 million or $0.11 per fully diluted, fully exchanged share for the Second Quarter 2012, an increase of 196% and 182% respectively.

For the six months ended June 30, 2013, revenues were $263.0 million, compared to $194.3 million for the six months ended June 30, 2012, an increase of 35%. U.S. GAAP net income attributable to FXCM Inc. was $17.0 million for the six months ended June 30, 2013 or $0.55 per fully diluted FXCM Inc. Class A share, compared to $1.4 million or $0.07 per FXCM Inc. Class A share for the six months ended June 30, 2012.

Adjusted Pro Forma EBITDA for the six months ended June 30, 2013 was $98.3 million, compared to $45.9 million for the six months ended June 30, 2012, an increase of 114%. Adjusted Pro Forma Net Income was $40.8 million or $0.54 per share for the six months ended June 30, 2013, compared to $20.4 million or $0.28 per fully diluted, fully exchanged share for the six months ended June 30, 2012, an increase of 100% and 93%, respectively.

“FXCM turned in one of its best quarters with record revenues and our second highest EBITDA ever – only slightly below the fourth quarter of 2008, when volatility spiked to levels more than double what we saw in the second quarter,” said Drew Niv, Chief Executive Officer. “We have expanded the scale of our business to the point that we were able to deliver outstanding results in a much more moderate climate.”

“We now have $374 million of cash and are undrawn on our $155 million credit facility – leaving us with plenty of liquidity to pursue acquisitions,” he added.

Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC Units into FXCM Inc. Class A common stock, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity’s tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges and equity based compensation expense regarding a grant of stock options at the time of FXCM’s initial public offering (“IPO”) in December 2010 and reclassifies the allocation of earnings of Lucid non-controlling members recorded as compensation expense to net income attributable to non-controlling interest.

FXCM Inc. today announced certain key operating metrics for July 2013 for its retail and institutional foreign exchange business. Monthly activities included:

July 2013 Operating Metrics

Retail Trading Metrics
  • Retail customer trading volume(1) of $388 billion in July 2013, 2% lower than June 2013 and 35% higher than July 2012.
  • Average retail customer trading volume(1) per day of $16.9 billion in July 2013, 17% lower than June 2013 and 30% higher than July 2012.
  • An average of 456,044 retail client trades per day in July 2013, 22% lower than June 2013 and 28% higher than July 2012.
  • Tradable accounts(2) of 194,519 as of July 30, 2013, an increase of 3,521, or 2% from June 2013, and a decrease of 12,226 or 6%, from July 2012.

Institutional Trading Metrics
  • Institutional customer trading volume(1) of $185 billion in July 2013, 1% higher than June 2013 and 208% higher than July 2012.
  • Average institutional trading volume(1) per day of $8 billion in July 2013, 13% lower than June 2013 and 196% higher than July 2012.
  • An average of 44,139 institutional client trades per day in July 2013, 8% higher than June 2013 and 604% higher than July 2012.

“July continued the strong trading environment of the Second Quarter,” continued Niv. “We are pleased to report near-record levels in most of our key operating metrics.”

More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company's corporate website, www.fxcm.com.

This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website, www.fxcm.com.

(1) Volume that FXCM’s customers traded in period is translated into U.S. dollars.

(2) A Tradable Account is an account with sufficient funds to place a trade in accordance with FXCM’s trading policies.

Condensed Consolidated Adjusted Pro Forma and U.S. GAAP Results
 

Unaudited Adjusted Pro Forma(thousands, except per share amounts)
   

Unaudited Adjusted Pro Forma(thousands except per share amounts)
Three Months Ended June 30,   Six Months Ended June 30,

2013
 

2012
 

% Change

2013
 

2012
 

% Change
 
Total net revenues $ 140,133 $ 91,683 53 % $ 262,997 $ 194,273 35 %
 
Referring broker fees 22,422 19,968 12 % 43,772 40,157 9 %
Compensation and benefits 24,529 19,830 24 % 45,999 40,939 12 %
Loss on equity method investments, net 397 - 0 % 545 - 0 %
Other expenses   38,306     30,879   24 %   74,421     67,239 11 %
EBITDA   54,479     21,006   159 %   98,260     45,938 114 %
 
Depreciation and amortization 12,481 6,863 82 % 24,455 13,044 87 %
Interest on borrowings   1,290     271   376 %   2,107     540 290 %
Income before income taxes   40,708     13,872   193 %   71,698     32,354 122 %
 
Income tax provision 9,365 5,124 83 % 18,960 11,091 71 %
 
Net income   31,343     8,748   258 %   52,738     21,263 148 %
 
Net income attributable to non-controlling interest in FXCM Holdings, LLC - - 0 % - - 0 %
Net income attributable to non-controlling interest in Lucid Markets Trading Limited 8,043 873 821 % 11,921 873 1266 %
           
Net income attributable to FXCM Inc. $ 23,300   $ 7,875   196 % $ 40,817   $ 20,390 100 %
 
Pro forma fully exchanged, diluted weighted average shares outstanding   75,715     72,848   4 %   75,750     72,761 4 %
 
Earnings per share $ 0.31   $ 0.11   182 % $ 0.54   $ 0.28 93 %
 
 
Unaudited U.S. GAAP Unaudited U.S. GAAP
(thousands, except per share amounts) (thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,

2013

2012

% Change

2013

2012

% Change
 
Total net revenues $ 140,133 $ 91,683 53 % $ 262,997 $ 194,273 35 %
 
Compensation and benefits 26,587 33,802 -21 % 50,120 57,019 -12 %
Allocation of net income to Lucid members for services provided   15,004     -   0 %   15,004     - 0 %

Total compensation and benefits
41,591 33,802 23 % 65,124 57,019 14 %
Referring broker fees 22,422 19,968 12 % 43,772 40,157 9 %
Other expenses 38,306 34,804 10 % 74,421 71,164 5 %
Loss on equity method investments, net 397 - 0 % 545 - 0 %
Depreciation and amortization 12,481 6,863 82 % 24,455 13,044 87 %
Interest on borrowings   1,290     271       2,107     540 290 %
Income before income taxes   23,646     (4,025 ) 687 %   52,573     12,349 326 %
 
Income tax provision 6,390 (1,109 ) 676 % 14,349 1,258 1041 %
 
Net income   17,256     (2,916 ) 692 %   38,224     11,091 245 %
 
Net income attributable to non-controlling interest in FXCM Holdings, LLC 14,093 (2,348 ) 700 % 24,323 8,771 177 %
 
Net income attributable to non-controlling interest in Lucid Markets Trading Limited (6,961 ) 873 -897 % (3,083 ) 873 -453 %
           
Net income attributable to FXCM Inc. $ 10,124   $ (1,441 ) 803 % $ 16,984   $ 1,447 1074 %
 
Net income $ 10,124   $ (1,441 ) 803 % $ 16,984   $ 1,447 1074 %
 
Weighted average Class A shares outstanding - Basic   30,695     22,296   38 %   29,589     20,142 47 %
Weighted average Class A shares outstanding - Diluted   31,829     22,296   43 %   30,759     20,142 53 %
 
Net income per Class A share
Basic $ 0.33   $ (0.06 ) 650 % $ 0.57   $ 0.07 714 %
Net income per Class A share
Diluted $ 0.32   $ (0.06 ) 633 % $ 0.55   $ 0.07 686 %
 

Selected Operating Metrics
 

 
   
Three Months Ended June 30, Six Months Ended June 30,

2013
 

2012
 

% Change

2013
 

2012
 

% Change
 
Total trading volume ($ in billions) $ 1,152 $ 869 33 % $ 2,193 $ 1,854 18 %
 
Total institutional trading volume ($ in billions) $ 558 $ 402

39
% $ 931 $ 800 16 %
 
Total active accounts 182,225 174,218 5 % 182,225 174,218 5 %
 
Trading days in period 65 65 0 % 128 130 -2 %
 
Daily average trades 516,960 367,051 41 % 478,129 372,944 28 %
 
Daily average trades per active account 2.8 2.1

33
% 2.6 2.1

24
%
 
Retail trading revenue per million traded $ 90 $ 90 0 % $ 89 $ 92 -3 %
 
Total customer equity ($ in millions) $ 1,172 $ 1,255 -7 % $ 1,172 $ 1,255 -7 %
 

Non-GAAP Financial Measures

Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per fully diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP.

Declaration of Quarterly Dividend

The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on September 30 th, 2013 to Class A stockholders of record at the close of business on September 6 th, 2013.

Conference Call

As previously announced, FXCM Inc. will host a conference call to discuss the results at 8:15 a.m. (EDT). This conference call will be available to domestic participants by dialing 877.303.9132 and 408.337.0136 for international participants. The conference ID number is 26671427.

A live, audio webcast, a copy of FXCM's earnings release, and a presentation and replay of this conference call will also be available at http://ir.fxcm.com/.

Disclosure Regarding Forward-Looking Statements

In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s Annual Report on Form 10-K and other SEC filings, which are accessible on the SEC website at sec.gov.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

About FXCM Inc.

FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide.

At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference (“CFD”) products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.

Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.

ANNEX I
       
Schedule    

PageNumber
       
U.S. GAAP Results      
Unaudited U.S. GAAP Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012     A-1
Unaudited U.S. GAAP Consolidated Statements of Financial Condition As of June 30, 2013 and December 31, 2012     A-2
       
Adjusted Pro Forma Results     A-3
Unaudited Adjusted Pro Forma and U.S. GAAP Consolidated Statements of Operations for the Three Months Ended June 30, 2013 and 2012     A-5
Unaudited Adjusted Pro Forma, Adjusted Pro Forma Cash and U.S. GAAP Consolidated Statements of Operations for the Six Months Ended June 30, 2013 and 2012     A-6
Reconciliation of EBITDA to U.S. GAAP Net Income     A-7
   
FXCM Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited )
  Three Months Ended June 30     Six Months Ended June 30,
2013   2012 2013   2012
Revenues
 
Retail trading revenue $ 104,068 $ 77,870 $ 195,322 $ 170,596
Institutional trading revenue   31,792     11,220     59,348     17,040  
Trading revenue 135,860 89,090 254,670 187,636
 
Interest income 670 1,059 1,349 1,920
Brokerage interest expense   (69 )   (78 )   (124 )   (169 )
Net interest income 601 981 1,225 1,751
 
Other operating income   3,672     1,612     7,102     4,886  
 
Total net revenues   140,133     91,683     262,997     194,273  
 
Operating Expenses
 
Compensation and benefits 26,587 33,802 50,120 57,019
Allocation of net income to Lucid members for services provided   15,004     -     15,004     -  

Total compensation and benefits
41,591 33,802 65,124 57,019
Referring broker fees 22,422 19,968 43,772 40,157
Advertising and marketing 6,157 7,487 13,508 15,757
Communication and technology 9,765 8,611 18,120 16,991
Trading costs, prime brokerage and clearing fees 8,961 1,893 16,899 3,206
General and administrative 13,423 16,813 25,894 35,210
Depreciation and amortization 12,481 6,863 24,455 13,044
       
 
Total operating expenses   114,800     95,437     207,772     181,384  
 
Operating income 25,333 (3,754 ) 55,225 12,889
 
Loss on equity method investments, net 397 - 545 -
Interest on borrowings   1,290     271     2,107     540  
 
Income before income taxes 23,646 (4,025 ) 52,573 12,349
Income tax provision (benefit)   6,390     (1,109 )   14,349     1,258  
Net income 17,256 (2,916 ) 38,224 11,091
Net income attributable to non-controlling interest in FXCM Holdings, LLC 14,093 (2,348 ) 24,323 8,771
Net income attributable to non-controlling interest in Lucid Markets Trading Limited   (6,961 )   873     (3,083 )   873  
Net income attributable to FXCM Inc. $ 10,124   $ (1,441 ) $ 16,984   $ 1,447  
 
 
Net Income $ 10,124   $ (1,441 ) $ 16,984   $ 1,447  
 
Weighted average Class A shares outstanding - Basic   30,695     22,296     29,589     20,142  
Weighted average Class A shares outstanding - Diluted   31,829     22,296     30,759     20,142  
 
Net Income per Class A Share
Basic $ 0.33   $ (0.06 ) $ 0.57   $ 0.07  
Diluted $ 0.32   $ (0.06 ) $ 0.55   $ 0.07  
 

A-1
FXCM Inc.
Condensed Consolidated Statements of Financial Condition
As of June 30, 2013 and December 31, 2012
(Amounts in thousands except share data)
    (Unaudited)    
June 30, December 31,
  2013 2012
 
Assets
 
Current assets
Cash and cash equivalents $ 373,745 $ 272,332
Cash and cash equivalents, held for customers 1,171,487 1,190,762
Due from brokers 5,517 8,040
Accounts receivables, net 27,528 5,485
Deferred tax asset 9,838 10,598
Tax receivable   938     6,003  
Total current assets 1,589,053 1,493,220
 
Deferred tax asset 134,768 117,221
Office, communication and computer equipment, net 51,437 50,316
Goodwill 280,674 285,654
Intangible assets, net 81,930 97,792
Other assets   27,376     20,967  
Total assets $ 2,165,238   $ 2,065,170  
 
Liabilities and Equity
 
Current liabilities
Customer account liabilities $ 1,171,487 $ 1,190,762
Accounts payable and accrued expenses 62,474 56,841
Credit agreement - 85,000
Notes payable 15,300 22,867
Due to brokers 43,173 14,494
Deferred tax liability 1,655 7,100
Due to related parties pursuant to tax receivable agreement   12,951     13,569  
Total current liabilities 1,307,040 1,390,633
Deferred tax liability 8,348 12,351
Due to related parties pursuant to tax receivable agreement 99,159 87,271
Senior convertible notes   143,789     -  
Total liabilities   1,558,336     1,490,255  
 
Commitments and Contingencies - -
 
Stockholders' Equity
Class A common stock, par value $0.01 per share; 380 347
3,000,000,000 shares authorized, 38,012,793 and 34,683,599 shares issued
and outstanding as of June 30, 2013 and December 31, 2012, respectively
Class B common stock, par value $0.01 per share; 1 1
1,000,000 shares authorized, 40 and 43 shares issued
and outstanding as of June 30, 2013 and December 31, 2012, respectively
Additional paid-in-capital 199,104 171,390
Retained earnings 23,671 11,122
Accumulated other comprehensive loss   (6,874 )   (1,301 )
Total stockholders' equity FXCM Inc. 216,282 181,559
Non-controlling interests   390,620     393,356  
Total stockholders' equity   606,902     574,915  
Total liabilities and stockholders' equity $ 2,165,238   $ 2,065,170  
 

A-2

Adjusted Pro Forma Results

Throughout the discussion of FXCM Inc.’s results, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), adjusted to exclude certain items and reflects the conversion of all units of FXCM Holdings, LLC for shares of Class A common stock of FXCM Inc. The Company’s management believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare FXCM’s results across several periods and facilitate an understanding of FXCM’s operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:

1. Assumed Exchange of Units of FXCM Holdings, LLC for FXCM Inc. Class A Shares. As a result of the exchange of FXCM Holdings units, the non-controlling interest related to these units is converted to controlling interest. The Company’s management believes that it is useful to provide the per-share effect associated with the assumed exchange of all FXCM Holdings units.

2. Stock Based Compensation Expense. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate expense relating to stock based compensation relating to the Company’s initial public offering and compensation costs associated with the renegotiation of certain employment contracts. The Company’s management believes it is useful to provide the effects of eliminating these expenses relating to these one-time items.

3. Lucid Minority Interest/Compensation Expense. Our reported U.S. GAAP results reflect the portion of the 49.9% of Lucid earnings allocated among the non-controlling members of Lucid based on services provided as a component of compensation expense under “Allocation of Net Income to Lucid Members for Services Provided.” Adjustments have been made to the Adjusted Pro Forma Earnings to reclassify this allocation of Lucid’s earnings attributable to non-controlling members to “Net income attributable to non-controlling interest in Lucid.” The Company’s management believes that this reclassification provides a more meaningful view of the Company’s operating expenses and the Company’s economic arrangement with Lucid’s non-controlling members. This adjustment has no impact on net income as reported by FXCM Inc.

4. Acquisition Costs. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain acquisition related costs. The Company’s management believes it is useful to provide the effects of eliminating these expenses.

5. Regulatory Costs. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain costs (including client reimbursements) associated with settling certain historical trade execution issues with the Company’s regulators. The Company’s management believes it is useful to provide the effects of eliminating these expenses relating to these one-time items.

A-3

6. Income Taxes. Prior to the initial public offering FXCM was organized as a series of limited liability companies and foreign corporations, and even following the initial public offering not all of the Company’s income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted Pro Forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C corporation in the U.S. at the prevailing corporate rates. This assumption is consistent with the assumption that all of FXCM Holdings’ units are exchanged for shares of FXCM Inc. Class A common stock, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.

A-4
FXCM Inc.
Adjusted Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited )
  Three Months Ended June 30,
2013   2012
As       Adjusted     As       Adjusted  
Reported Adjustments Pro Forma Reported Adjustments Pro Forma
Revenues
 
Retail trading revenue $ 104,068 - $ 104,068 $ 77,870 - $ 77,870
Institutional trading revenue   31,792     -     31,792     11,220     -     11,220  
Trading revenue 135,860 - 135,860 89,090 - 89,090
 
Interest income 670 - 670 1,059 - 1,059
Brokerage interest expense   (69 )   -     (69 )   (78 )   -     (78 )
Net interest income 601 - 601 981 - 981
 
Other operating income
Other   3,672     -     3,672     1,612     -     1,612  
 
Total net revenues   140,133     -     140,133     91,683     -     91,683  
 
Operating Expenses
 
Compensation and benefits 26,587 (2,058 )

(1)
24,529 33,802 (13,972 )

(5)
19,830
Allocation of net income to Lucid members for services provided   15,004     (15,004 )

(2)
  -     -     -     -  

Total compensation and benefits
41,591 (17,062 ) 24,529 33,802 (13,972 ) 19,830
Referring broker fees 22,422 - 22,422 19,968 - 19,968
Advertising and marketing 6,157 - 6,157 7,487 - 7,487
Communication and technology 9,765 - 9,765 8,611 - 8,611
Trading costs, prime brokerage and clearing fees 8,961 8,961 1,893 - 1,893
General and administrative 13,423 - 13,423 16,813 (3,925 )

(6)
12,888
Depreciation and amortization   12,481     -     12,481     6,863     -     6,863  
Total operating expenses   114,800     (17,062 )   97,738     95,437     (17,897 )   77,540  
 
Operating income (loss) 25,333 17,062 42,395 (3,754 ) 17,897 14,143
 
Loss on equity method investments, net 397 - 397 - - -
Interest on borrowings   1,290     -     1,290     271     -     271  
 
Income before income taxes 23,646 17,062 40,708 (4,025 ) 17,897 13,872
Income tax provision (benefit)   6,390     2,975  

(3)
  9,365     (1,109 )   6,233  

(3)
  5,124  
Net income 17,256 14,087 31,343 (2,916 ) 11,664 8,748
Net income attributable to non-controlling interest in FXCM Holdings, LLC 14,093 (14,093 )

(4)
- (2,348 ) 2,348

(4)
-
Net income attributable to non-controlling interest in Lucid Markets Trading Limited   (6,961 )   15,004  

(2)
  8,043     873     -     873  
Net income attributable to FXCM Inc. $ 10,124   $ 13,176   $ 23,300   $ (1,441 ) $ 9,316   $ 7,875  
 
 

Pro Forma fully exchanged, fully diluted weighted average shares outstanding
  75,715  

(7)
  72,848  

(7)
 
Adjusted Pro Forma net income per fully exchanged, fully diluted weighted average shares outstanding $ 0.31   $ 0.11  
 

(1) Represents the elimination of equity-based compensation associated with the IPO.
 
(2) Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling members of Lucid based on services provided for U.S. GAAP purposes to Net income attributable to non-controlling interest in Lucid Markets Trading Limited.
 
(3) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 23.0% and 36.9% for the three months ended June 30, 2013 and 2012, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC ("Holdings") units for shares of Class A common stock of the Company and reflects the tax effect of any pro forma adjustments.
 
(4) Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.
 

(5)  Represents the elimination of stock-based compensation associated with the IPO, severance and stock-based compensation in connection with the renegotiation of certain employment contracts in the Company's institutional and retail businesses.
 

(6) Represents the elimination of certain acquisition-related costs and the elimination of certain costs (including client reimbursements) associated with settling certain historical trade execution issues with the Financial Services Agency of Japan.
 

(7) Fully diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.
 

A-5
FXCM Inc.
Adjusted Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited )
  Six months ended June 30,
2013   2012
As       Adjusted     As       Adjusted  
Reported Adjustments Pro Forma Reported Adjustments Pro Forma
Revenues
 
Retail trading revenue $ 195,322 - $ 195,322 $ 170,596 - $ 170,596
Institutional trading revenue   59,348     -     59,348     17,040     -     17,040  
Trading revenue 254,670 - 254,670 187,636 - 187,636
 
Interest income 1,349 - 1,349 1,920 - 1,920
Brokerage interest expense   (124 )   -     (124 )   (169 )   -     (169 )
Net interest income 1,225 - 1,225 1,751 - 1,751
 
Other operating income   7,102     -     7,102     4,886     -     4,886  
 
Total net revenues   262,997     -     262,997     194,273     -     194,273  
 
Operating Expenses
 
Compensation and benefits 50,120 (4,121 )

(1)
45,999 57,019 (16,080 )

(5)
40,939
Allocation of net income to Lucid members for services provided   15,004     (15,004 )

(2)
  -     -     -     -  

Total compensation and benefits
65,124 (19,125 ) 45,999 57,019 (16,080 ) 40,939
Referring broker fees 43,772 - 43,772 40,157 - 40,157
Advertising and marketing 13,508 - 13,508 15,757 - 15,757
Communication and technology 18,120 - 18,120 16,991 - 16,991
Trading costs, prime brokerage and clearing fees 16,899 - 16,899 3,206 - 3,206
General and administrative 25,894 - 25,894 35,210 (3,925 )

(7)
31,285
Depreciation and amortization   24,455       24,455     13,044     -     13,044  
Total operating expenses   207,772     (19,125 )   188,647     181,384     (20,005 )   161,379  
 
Operating income (loss) 55,225 19,125 74,350 12,889 20,005 32,894
 
Other expense
Loss on equity method investments, net 545 - 545 - - -
Interest on borrowings   2,107     -     2,107     540     -     540  
 
Income before income taxes 52,573 19,125 71,698 12,349 20,005 32,354
Income tax provision (benefit)   14,349     4,611  

(3)
  18,960     1,258     9,833  

(3)
  11,091  
Net income 38,224 14,514 52,738 11,091 10,172 21,263
Net income attributable to non-controlling interest in FXCM Holdings, LLC 24,323 (24,323 )

(4)
- 8,771 (8,771 )

(4)
-
Net income attributable to non-controlling interest in Lucid Markets Trading Limited   (3,083 )   15,004  

(2)
  11,921     873     -     873  
Net income attributable to FXCM Inc. $ 16,984   $ 23,833   $ 40,817   $ 1,447   $ 18,943   $ 20,390  
 
 
Pro Forma fully exchanged, fully diluted weighted average shares outstanding   75,750  

(6)
  72,761  

(6)
 
Adjusted Pro Forma net income per fully exchanged, fully diluted weighted average shares outstanding $ 0.54   $ 0.28  
 
(1) Represents the elimination of stock-based compensation associated with the IPO.
 
(2) Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling members of Lucid based on services provided for U.S. GAAP purposes to Net income attributable to non-controlling interest in Lucid Markets Trading Limited.
 
(3) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 26.4% and 34.3% for the six months ended June 30, 2013 and 2012, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders Holdings units for shares of Class A common stock of the Company.
 
(4) Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.
 
(5) Represents the elimination of stock-based compensation associated with the IPO, severance and stock-based compensation in connection with the renegotiation of certain employment contracts in the Company's institutional and retail businesses.
 
(6) Fully diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.
 
(7) Represents the elimination of certain acquisition-related costs and the elimination of certain costs (including client reimbursements) associated with settling certain historical trade execution issues with the Financial Services Agency of Japan.
 

A-6
FXCM Inc.
Reconciliation of EBITDA to U.S. GAAP Net Income
(In thousands)
(Unaudited)
         
Three Months Ended June 30, Six Months Ended June 30,
Adjusted Pro Forma   U.S. GAAP Adjusted Pro Forma   U.S. GAAP

2013
 

2012

2013
 

2012

2013
 

2012

2013
 

2012
 
Revenues $ 140,133 $ 91,683 $ 140,133 $ 91,683 $ 262,997 $ 194,273 $ 262,997 $ 194,273
 
Net income attributable to FXCM Inc. $ 23,300 $ 7,875 $ 10,124 $ (1,441 ) $ 40,817 $ 20,390 $ 16,984 $ 1,447
Net income attributable to non-controlling interest in FXCM Holdings, LLC - - 14,093 (2,348 ) - - 24,323 8,771
Net income attributable to non-controlling interest in Lucid Markets Trading Limited 8,043 873 (6,961 ) 873 11,921 873 (3,083 ) 873
Provision (benefit) for income taxes 9,365 5,124 6,390 (1,109 ) 18,960 11,091 14,349 1,258
Depreciation and amortization 12,481 6,863 12,481 6,863 24,455 13,044 24,455 13,044
Interest on borrowings   1,290     271     1,290       271     2,107     540     2,107       540
EBITDA $ 54,479   $ 21,006   $ 37,417     $ 3,109   $ 98,260   $ 45,938   $ 79,135     $ 25,933
 

A-7

Copyright Business Wire 2010